Buffalo News: IDA approves tax incentives for four projects
IDA approves tax breaks for Buffalo, Cheektowaga projects
on April 22, 2015 - 12:40 PM
, updated April 22, 2015 at 3:09 PM
Directors of the Erie County Industrial Development Agency on Wednesday approved nearly $2 million in tax breaks for four development projects in Buffalo and Cheektowaga.
The approvals support building re-use efforts by Ellicott Development Co., Nick Sinatra and Paul Kolkmeyer and two new industrial buildings by Benderson Development Co.
All four incentive packages were approved by overwhelming margins, although County Executive Mark C. Poloncarz and Christopher Johnston, director of business development at Harper International, objected to two of the projects, saying developers should be able to justify the projects on their own.
"We should allow capitalism to work for itself," Johnston said, in explaining his vote. "I think Main Street is starting to stand on its own, and we have to be respectful of our responsibility to turn off the spigot."
In the biggest of the four projects, Benderson will start construction as soon as next week on the first of two proposed industrial warehouse buildings in its Broadway Development Park, at 2839-2871 Broadway in Cheektowaga. The developer was approved for $898,000 in sales and property tax breaks for the $6.48 million project.
The project would complete the industrial park, which currently has five buildings and 330,000 square feet of space that is 90 percent occupied, with 250 employees. The two buildings, both speculative with no confirmed tenants as yet, would total 100,000 square feet, and would meet a recognized need in the area for more warehouse and distribution facilities.
The first building, with 35,000 square feet of space, would be completed by yearend, while construction on the second 65,000-square-foot building would begin a year from now and wrap up by the end of 2016, said Eric Recoon, Benderson vice president.
ECIDA executive vice president of business development John Cappellino noted that "this would be the first spec building to come before the IDA in a number of years." Officials worked with Benderson to structure the terms of an agreement that would meet IDA requirements. To win approval, and to overcome initial opposition from Poloncarz, Benderson doubled its jobs commitment, pledging to create 35 jobs over the next two years, even though it doesn't yet have a signed lease. If it falls short of 30, it could face recapture of the tax breaks.
"I'm not generally in favor of spec buildings," said Poloncarz, who historically has been a tough critic of EDICA incentives. "But there is a need for this type of building throughout our region, especially in the core like Cheektowaga."
ECIDA also approved $339,000 in sales and mortgage recording tax breaks for Ellicott's planned conversion of a vacant former commercial building at 960 Busti Ave., overlooking the Niagara River near the Peace Bridge, into two floors of retail and commercial space and two floors with 18 residential apartments. The 56,000-square-foot building, vacant for 20 years, was built in the early 1920s and once owned by General Electric Co. and later by Multiform Desiccants.
Ellicott will invest $6.96 million to create 27,000 square feet of commercial space on the first and second floors, and 23,000 square feet of residential space on the upper floors. The apartments will range from 850 to 1,750 square feet, and will rent for $1,000 to $2,000 per month. The project will create one permanent job and 42 construction jobs. The developer is working with the State Historic Preservation Office to get $1.2 million in historic tax credits, and will seek city property tax breaks.
"To get that building up to snuff is going to be transformative to that thoroughfare," said Dottie Gallagher-Cohen, president and CEO of the Buffalo Niagara Partnership, and also an ECIDA board member. "It'll make a big difference."
The board voted in favor of $316,000 in sales and mortgage recording tax breaks for Sinatra's planned $7.57 million conversion of the former Phoenix Brewery building, at 835-847 Washington St. on the Buffalo Niagara Medical Campus, into 30 one- and two-bedroom luxury apartments and 3,000 square feet of commercial space. The apartments would range from 750 to 1,250 square feet in size, with an average rent of $1,500 per month. A parking ramp will have 24 spaces.
The project, which would also incorporate a city property tax break and $1.74 million in historic tax credits, would create one permanent job and 42 construction jobs. A partnership with New York City investor Daniel Lewis incorporates a pledge to donate 10 percent of profits to Say Yes Buffalo's college-scholarship fund. "This is a very critical project," Brown said. "This continues the momentum that we're seeing in downtown Buffalo."
But Johnston, while supportive of the project, questioned the need for taxpayer support, given that "the medical campus has received significant state, local and federal funds to redevelop it."
Finally, ECIDA backed $413,000 in sales and mortgage breaks for the plan by Kolkmeyer and partners Ronald Toski and Andrew Shaevel to renovate the former five-story Stanton Building at 251 Main St. in downtown Buffalo into 36 one- and two-bedroom apartments and a new headquarters for Kolkmeyer's real estate business, Priam Enterprises LLC. The 46,460-square-foot building was constructed in 1873 and was last occupied by Marine Midland Bank, predecessor to HSBC Bank USA, but has been vacant for a dozen years.
The $8.2 million project calls for one- and two-bedroom apartments of 800 to 1,300 square feet, renting for $1,275 to $1,995 per month, plus 1,500 square feet of first-floor office space. The conversion, which would create one new job and 37 construction jobs, anticipates $2.3 million in historic tax credits, plus city property tax breaks.
But it met with staunch opposition from Poloncarz and Johnston. "It may be adaptive reuse, but they made a conscious decision to take it off the market and turn it into apartments," the county executive said, contrasting it with the Phoenix and Busti projects. "The other two premises are in such bad shape that nothing can be done other than strip them and rebuild them. I don't see this as a project that the IDA should be supporting."
Gallagher-Cohen countered by citing data that the Buffalo market has 2.4 million square feet of downtown commercial office space that would take more than a decade to absorb, so the Stanton would languish empty if not converted. "I would agree with the county executive if we had enough commercial demand in the city of Buffalo," she said. "Unfortunately, we don't and with the HSBC tower, that's not getting better anytime soon."